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Indian Labour Laws and Labour Markets

Indian Labour Laws and Labour Markets

  • Indian labour market is characterized by a sharp dichotomy. A large number of establishments in the unorganized sector remain outside any regulation, while the organized sector has been regulated fairly stringently.
  • It can be reasonably argued that the organized sector has provided too much of job-security for too long, while the unorganized sector has provided too little to too many.
  • Various studies indicate that Indian labour laws are highly protective of labour and labour markets are relatively inflexible.
  • These laws apply only to the organized sector. Consequently, these laws have restricted labour mobility, have led to capital-intensive methods in the organized sector and adversely affected the sector’s long-run demand for labour.
  • Labour being a subject in the concurrent list, state-level labour regulations are also an important determinant of industrial performance.
  • Evidence suggests that States, which have enacted more pro-worker regulations, have lost out on industrial production in general.
  • The Twelfth Plan targets generation of additional employment opportunities in services and manufacturing, in particular, labour intensive manufacturing sectors such as food processing, leather products, footwear and textiles, and in service sectors such as tourism and construction.
  • It calls for elimination of distorting fiscal incentives which foster capital intensity; infrastructure investment; removal of distortions that hinder competition, prevent entry and discourage graduation from unorganized to organized status; and greater emphasis on vocational training and skill development to improve employability of youth.                              Indian Labour Laws and Labour Markets
  • Addressing the challenge of unemployment in the rural areas of the country is central to the development of rural sector for ameliorating the economic condition of the people.
  • Wage employment is provided in rural areas under National Rural Employment Guarantee Act (NREGA) and Sampoorna Grameen Rozgar Yojana (SGRY) whereas self-employment is provided under Swarnajyanti Gram Swarozgar Yojana (SGSY).
  • Besides generating employment these wage employment schemes also ensure creation of durable assets in rural areas. Initiatives are also taken by the Ministry to build and upgrade the basic rural infrastructure through various schemes.
  • Under Pradhan Mantri Gram Sadak Yojana (PMGSY) construction and repairing of rural roads are taken up to ensure rural connectivity.
  • It is expected under the scheme that an expanded and renovated rural road network will lead to an increase in rural employment opportunities, better access to regulated and fair market, better access to health education and other public services so as to accelerate the pace of economic growth in rural areas.
  • Similarly basic amenities for housing, drinking water and toilets, etc. are provided under Indira Awaas Yojana (lAY), Accelerated Rural Water Supply Programme (ARWSP) and Total Sanitation Campaign (TSC) to enhance the welfare and well-being of the vulnerable sections of rural population.
  • Area Development is encouraged through watershed programmes to check the diminishing productivity of water land and loss of natural resources.                  Indian Labour Laws and Labour Markets



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